'Crypto Week' set to be pivotal moment for digital asset legislation: Here's what you need to know

Lawmakers and cryptocurrency advocates are gearing up for what is to be one of the biggest weeks for digital asset legislation and could end in a stablecoin bill in front of President Donald Trump's desk by Friday.

In what is being called "Crypto Week," the House of Representatives will consider the Guiding and Establishing National Innovation for U.S. Stablecoins, or GENIUS, as well as the Digital Asset Market Clarity Act, or Clarity for short.

GENIUS, which has already been passed in the Senate , would require stablecoins to be fully backed by U.S. dollars or similarly liquid assets, mandate annual audits for issuers with a market capitalization of more than $50 billion, and establish guidelines for foreign issuance. That bill could be at Trump's desk before the end of the week.

Meanwhile, Clarity takes a whole-of-crypto approach and would create a clear regulatory framework for crypto in part through designating how the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission will regulate. The bill also requires digital asset firms to provide retail financial disclosures and segregate corporate and customer funds.

That bill has not gone through the Senate, though Republican senators have laid out principles and imposed a deadline of September 30 to get something done. A crypto market structure framework is viewed as a heavier lift given the wide range of complexities with regulating the whole industry.

Sources familiar with the discussions said they anticipate passage of Clarity will be on Wednesday, with GENIUS slated for Thursday. A House Rules Committee will decide later on Monday the schedule and whether amendments will be allowed, but the bills themselves are unlikely to change substantially.

The Cedar Innovation Foundation, a crypto-advocacy group, said it views the Clarity Act as "the most important vote members will take this Congress."

"We can no longer afford the hodgepodge of 100-year-old regulations to keep consumers protected and govern the foundational technology of the present," the group said in a statement. "It’s time for clear and responsible rules of the road for crypto to protect consumers, unlock American developers, and create good jobs here at home."

Trump's conflicts of interest

At the center of Democrats' concerns for both bills has been President Trump's involvement with digital assets. Bloomberg estimates the sitting president has profited some $620 million from his family's crypto ventures, including the World Liberty Financial DeFi and stablecoin project and the TRUMP and MELANIA memecoin launches.

Last week, top Democrats of the House Financial Services Committee Maxine Waters and Stephen Lynch called "Crypto Week," instead "Anti-Crypto Corruption Week," and said they would oppose both bills.

“Aside from lacking urgently needed consumer protections and national security guardrails, these bills would make Congress complicit in Trump’s unprecedented crypto scam – one that has personally enriched himself, his entire family, and the billionaire insiders in his cabinet, all while defrauding investors," Waters said in a statement on Friday.

House Democrats are hosting a staff-level briefing at 3 p.m. ET on Monday on why the bills should be rejected.

There have also been concerns about Trump family-run World Liberty Financial USD, which is now one of the largest stablecoins in the world. In a call with a Democratic aide on the Senate Banking Committee said they expect that stablecoin will grow significantly as a result of GENIUS.

The aide pointed to an executive order issued in February called "Ensuring Accountability for all Agencies," which looks to assert White House control over independent financial regulators. Those financial regulators would approve of applications to be a stablecoin issuer under the GENIUS Act, the aide said. The president would then have control over approval of financial products, ongoing regulation, as well as enforcement, the aide added.

The best regulation is one where certain benchmarks are put in place that allow stablecoin issuers to get proper licensing, said Jennifer Schulp, director of financial regulation studies at the libertarian think tank Cato Institute. GENIUS does that, but also gives discretion to regulators and has provisions involving appeals to the judicial system.

In the past, Democratic efforts have looked to put forth regulatory regimes that give regulators a wide swath of discretion, Schulp said in an interview with The Block.

"Regulatory discretion is itself a problem and does open itself up to the types of concerns that are described where regulators might be acting in some other capacity than simply enforcing the law — and that's a problem," Schulp added. "The GENIUS Act is not unfettered discretion, although it is more discretion than I would like to see."

What's next for Clarity?

A market structure bill will not be passed in the Senate soon, Schulp said, but seeing how House Democrats vote on Clarity this week could shape conversation in the Senate.

"It's going to depend this week on how many Democrats they can get on board for Clarity as a way to signal the bipartisan strength of Clarity to the Senate," Schulp said.

The Senate will likely not use Clarity as a starting point, but will likely take some pieces from it, a person familiar with the discussions said. The Senate version is more likely to be based on work done already by Sens. Cynthia Lummis, R-Wyo., and Sen. Kirsten Gillibrand, D-N.Y., they said.

The Clarity Act has some significant issues when it comes to DeFi, some say.

According to a person familiar with the matter, the DeFi industry is concerned about its status in regards to federal preemption. As written, Clarity would require centralized exchanges to register with federal agencies and states would have to follow federal law, but there is not that same federal preemption for decentralized exchanges, leaving them vulnerable to a patchwork of state laws and potential enforcement actions, the person told The Block.

The DeFi industry also has concerns around registration limitations in one of the sections in the Clarity Act, the person familiar said.

Benchmark analyst Mark Palmer said Clarity would "likely spur the widespread adoption of digital assets by institutional investors including asset managers, hedge funds, banks, and other financial entities that have long held crypto at arm’s length due to regulatory uncertainty," in a note on Monday.

"The CLARITY Act would act as a regulatory unlock by giving institutions confidence in what digital assets they can trade, custody, and hold," Palmer added. 

Oh, and the CBDC bill

The House will also be considering a bill this week led by Majority Whip Tom Emmer, R-Minn., to block the Federal Reserve from issuing a central bank digital currency directly to individuals. A CBDC is a digital form of fiat money, directly issued and regulated by the central bank of a country. Some Republican lawmakers have been staunchly opposed to a CBDC and say a CBDC could open the door to government surveillance of peoples' transactions.

The Federal Reserve has been exploring the possibility of issuing a CBDC and released a report in 2022 examining the pros and cons of a CBDC, but central bank officials have thrown cold water on the idea in the past. Fed Chair Jerome Powell has also said the Fed won't issue a CBDC without congressional approval.

Treasury Secretary Scott Bessent has also said he saw " no reason " for the U.S. to have a CBDC during his nomination hearing earlier this year.

Investment bank Jaret Seiberg said all three bills — GENIUS, Clarity and the CBDC bill will pass with some Democratic support, in a note on Monday.

"House GOP leaders would not set the bills for a vote if they were not confident Republicans would back the bills," Seiberg said. "And at least some Democrats are going to see little value to being on losing side of this legislative fight.

Updated at 7:55 p.m. UTC time on July 14 to include additional details